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Trusteeship Magazine

How Will Education Today Affect the Economy Tomorrow?

By Robert Reich
March/April
2013
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Robert Reich, Chancellor’s Professor of Public Policy at the Goldman School of Public Policy, University of California, Berkeley, and the former U.S. Secretary of Labor under President Clinton, will be speaking at AGB’s National Conference on Trusteeship in April in San Francisco. His topic: “Education for a Competitive Future.” Trusteeship magazine asked him to give us a preview of what he would be speaking about.

Is college still worth it? Given the high costs of a postsecondary education, is the return on that investment for students enough to justify it?

Yes, but the trends aren’t encouraging. A four-year college degree has generated lifetime income at least 50 percent higher, on average, than that received by someone with just a high-school degree. As the economy becomes more technologically intensive—and as businesses depend to an ever-increasing degree on problem-solvers, problem-identifiers, and innovators—college degrees are likely to become even more valuable. That’s the good news. The bad news is that tuition is rising faster than inflation, which reduces the returns associated with a college degree. And we may be entering an era of permanently higher unemployment, even for holders of college degrees. The bad news doesn’t outweigh the good news—at least not yet. But if present trends continue, at some point in the not-too-distant future, a four-year degree may not be worth it.

Should all young people be expected to get a four-year college degree in order to be successful in this economy?

Ideally, not. If, like Germany, we offered young people a first-class technical education, they could look forward to good wages without a four-year college degree. But we’re not set up that way. Moreover, American employers use a college degree as a signal that someone has at least a high minimum level of numeracy, literacy, and social skill, although more and more employers today are reporting that graduates may possess the content knowledge to perform in the modern workplace but lack the basic workplace competencies. And many young people also use college as an opportunity to make contacts—through friends, parents of friends, and alumni—that help their employment prospects in the future. The bottom line: It’s absurd to make a four-year college degree the only gateway to good jobs, but we haven’t created other gateways.

How can we make college more affordable to qualified students?

I’d scrap all federally subsidized loan programs to support enrollment at public colleges and universities, as well as all tuition and fees at public colleges and universities. I would substitute an income-contingent tuition payback system that requires all graduates to pay 10 percent of their after-tax incomes for the first 15 years of full-time employment into a common pool that finances public higher education, at which point the entire tuition would be considered to be repaid. [Editor’s Note: The Obama administration introduced a “Pay as You Earn” program in late 2012 that is similar to one Congress passed in 2010 for loan repayment, not tuition repayment, as Reich is suggesting. Last spring, the New York Federal Reserve estimated that only about 20 percent of those eligible for income-based or income-contingent loan repayment were taking advantage of existing plans. For more, see Perspectives, November/ December 2012.]

What should colleges and universities be doing to make sure their institutions remain competitive and are responding to the needs of today’s students?

Expand online learning—along with evening, weekend, and summer classes for students who are working. Develop three-year Bachelor of Technology programs combining the last year of high school with the first two years of college, enabling students to gain basic understanding of an area of technical knowledge (basic engineering, business, health, software, et al.). Reduce amenities unrelated to learning. Run more large-scale lecture classes combined with small, intensive seminars.

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